Iraq Pads Currency Reserves On High Oil Prices

BAGHDAD -- The Iraqi Central Bank has announced a large increase in the country's foreign-currency reserves, RFE/RL's Radio Free Iraq reports.

Mudher Muhammad Salih, an adviser to Central Bank Governor Sinan al-Shabibi, told RFE/RL on September 6 that the bank's reserves "are now at about $58 billion."

He said that was an increase from the $50 billion in foreign currency reserves it had at the end of 2010.

Salih added that the bank had recently succeeded in controlling the inflation rate, which he said in recent years had increased at a high rate and was 7.1 percent in July.

He said the Central Bank would continue to obtain different foreign currencies and increase its overall amount of foreign-currency reserves in order to protect the value of the Iraqi dinar, which he said was a "main goal" of the bank.

Iraq's foreign-currency reserves are 45 percent in dollars, 45 percent in euros, and 10 percent in British pounds.

Iraq depends on oil revenues for about 95 percent of its budget and the increase in foreign-currency reserves thus far this year is due to higher world prices for oil. Iraq has earned some 34 percent more from oil through the first five months than it had budgeted.

Economic experts welcomed the announcement about the country's currency reserves but warned that the total was still not high enough.

Iraqi economist Hilal al-Tahhan said the currency reserves should be roughly equivalent to Iraq's annual budget, which is about $79.6 billion.

Iraq's Baghdad-based Central Bank, which is an independent institution, has branches in Basra, Sulaymaniah, Irbil, and Mosul.